The 54 Tea Factory Companies managed by the Kenya Tea Development Agency Management Services Limited (KTDA-MS) have this week released Ksh27.62 billion being the final payment, popularly known as “bonus”, to tea farmers for the Financial Year ended June 30, 2020. This money will be available from their respective banks starting Friday, October 23, 2020.
This takes the total payment for the year to Ksh51.85 billion; up from Ksh46.48 billion last year. This year’s total payment represents an 11.6% increase from last year and means that, on average, farmers will take home more earnings than they did last year.
The growth is attributed to an increased green leaf production by the factories, which grew by 29 per cent for the year to stand at 1.45 billion kgs compared to 1.13 billion kgs over a similar period last year, as well as a more favourable exchange rate.
This is despite the average price for a kilo of sold tea falling by 8.1 percent to an average twelve-year low of USD 2.38 per kilo compared to USD 2.59 per kilo in 2019.
As a result of the growth in green tea production due to favourable weather conditions in the tea growing areas, the volume of made tea produced by the factories increased to 326 million kilograms (kgs) for the year, up from 267 million kgs last year.
On average, 4.5kgs of green leaf make one kilogramme of made tea. Consequently, turnover for the 54 Tea Factory Companies grew by 14% to stand Ksh79 billion compared to Ksh69 billion in 2019.
Payment to farmers is done both monthly and at the end of a financial year after respective factory boards have reviewed and approved the year’s audited financial accounts.
In determining the final payment, individual factory companies consider the revenue generated from tea sales, dividends from KTDA Holdings, interest earned from deposits and any other income, less the cost of operations, dividends payable to their shareholders/farmers and taxes. This year’s total payment to farmers amounts to 66% of total revenue by the factories.
Commenting on this, KTDA-MS Managing Director, Alfred Njagi said, “Other than for a few factories whose crop did not increase materially for various reasons, on average, tea farmers will take home higher earnings this year on the back of increased tea production due to good weather, which was further supported by a favourable currency exchange environment. The business environment was characterised by lower purchasing power and COVID-19 disruptions in our key markets,”
Despite the ongoing COVID-19 pandemic that has disrupted global supply chains, KTDA-managed factories have put in place adequate measures to ensure business continuity and continued to collect and process farmers’ leaf even at the height of government restrictions to contain the spread of the pandemic.
Cumulatively, tea factories in Bomet County paid Ksh6.42 billion while those in Embu, Kericho and Kiambu Counties, Ksh3 billion , Ksh4.94 billion and Ksh4.92 billion respectively.
Factories in Kirinyaga County Ksh5.39 billion while those in Kisii, Meru, and Murang’a Counties paid Ksh1.98 billion, Ksh5.79 billion, and Ksh9.8 billion respectively.
Factories in Nandi, Nyamira, Nyeri and Tharaka Nithi Counties cumulatively paid Ksh1.11 billion, Ksh3.40 billion, Ksh3.54 billion, and Ksh881 million respectively; while the factory in Trans Nzoia and the one in Vihiga County paid Ksh241 million and Ksh430 million respectively.